SACRAMENTO, Calif. (CN) – Pushing back at the State Bar of California’s request to hike attorney dues by $430, the state auditor on Tuesday recommended the agency instead scale back a planned hiring spree and spread the increase out incrementally.
State Auditor Elaine Howle says the state bar’s proposed 2020 licensing fee increase – which would raise fees on California lawyers for the first time in 20 years – is excessive and nearly $300 more than necessary.
Howle believes the agency came up with the increase in good faith, but miscalculated future operating and staffing costs. The state bar wants to raise the 2020 dues from the current $383 to $813, but Howle says it could get by with dues of $525.
“Although state bar supports its fee proposal with thorough cost projections, which represents a good step toward strengthening its transparency and accountability, we found some costs that state bar could reduce or delay,” the 56-page audit states.
After two decades without mandatory license increases, the state bar says labor and inflation costs have finally surpassed its budget. Its 13-member board of trustees authorized the licensing fee request in March, saying the agency needed a financial boost to catch up on a longstanding disciplinary case backlog and implement several new programs.
The state bar is responsible for licensing California’s 250,000 attorneys and says it processes 16,000 complaints against attorneys annually. The state bar can ask for annual fee increases, but the Legislature sets the figure in the end.
Howle ultimately agrees it’s time to raise annual dues, but she wants lawmakers to settle on a much lower number later this summer.
Included in the state bar’s request are plans to hire 58 new employees to investigate attorneys accused of misconduct. But Howle notes the state bar is in the process of improving and streamlining its disciplinary process and should only need to add 19 new employees.
Along with planned new employee costs, the state bar has tacked on a one-time $250 fee meant to spur information technology and building renovation projects. Howle again says the state bar overestimated and should implement the one-time fee incrementally over the next five years.
“We calculated the effects of these and other adjustments on state bar’s proposed special assessment fee for 2020 and found that a fee of $41 would coincide with projects state bar has scheduled for that year,” Howle said.
Another way to soften the blow on attorneys would be for the state bar to better manage its San Francisco building. The audit says the state bar has entered into below-market leases with tenants and should be bringing in more rental revenue from its headquarters in San Francisco’s financial district to pad its bottom line. It recommends the agency find a new property management firm and lease out portions of the building that are vacant.
As for the Legislature, Howle suggests lawmakers set 2020 dues to $525 and switch to a multi-year approval system instead of the current yearly cycle. She says a multi-year process helps the state bar set its budget and implement long-term projects. Under Howle’s plan, there would be a cap on dues and more opportunity for legislative oversight.
The state has used a two-year system on several occasions in the past but returned to approving fees on an annual basis in 2003.
“State bar’s current annual licensing fee-approval cycle has been detrimental to both licensed attorneys and the public,” the audit states. “Because state bar’s authorization to set the fee would not expire at the end of each year, as it does currently, state bar could anticipate consistent revenue and plan accordingly.”
Leah Wilson, executive director of the state bar, said she agrees with all of Howle’s recommendations.
“We are pleased that the California State Auditor affirmed the need for a substantial increase in the licensing fee, the state bar’s primary source of revenue,” Wilson said in a statement. “We agree with all of the state auditor’s recommendations, and we embrace the auditor’s suggestions for modifying the fee-setting process with multi-year fee bills and a mechanism for periodic adjustments based on current needs.”